March 2019 Market Overview

  • Karp Dagan Team
  • 03/1/19

While we remain in ‘wait-and-see’ mode, there are several indicators of us being in the midst of a strengthening market. In February, both Manhattan and Brooklyn’s high-end markets had their strongest weeks of the year. Manhattan’s luxury market ($5M & Up) saw 26 contracts signed the week of Feb. 11 — the first time this year to see more than 20 contracts signed — valued at roughly $245 million.

We’ve been experiencing the return of multiple bid / best and final scenarios. However, most of these multiple bid scenarios are below the actual asking price, and the result of several price reductions. Still, a big change from listings that sat idle with no bids for months in 2018.

Are these upticks here to stay as part of a broader shift or just one-off changes? Only time will tell. 

SALT Overhaul Comes With Hefty Price To Pay The Treasury Inspector General for Tax Administration estimates about 10.9 million taxpayers had state and local tax bills above the $10,000 deduction cap included in the 2017 tax law. The tax overhaul limited the amount of state and local taxes, dubbed SALT, that taxpayers can write off to $10,000. Those taxpayers in total have $323 billion in SALT that can’t be deducted. The change especially affects those in high-tax states like New York, New Jersey, Maryland and California. As a result, some wealthy residents are fleeing for lower tax states, like Florida. Governors of 8 states have formed a group to fight the SALT deduction cap, but they face an uphill battle. Senate Republicans have said they won’t reconsider the issue.

Townhouses Value Growing Twice As Fast As Apartments Over the last decade the median sales price for townhouses has climbed twice as fast as apartments. In 2018, townhouses accounted for 2.2% of all Manhattan residential sales, with 232 transactions. That market share has been consistent over the past 10 years. But the median sales price last year was $5.2 million — a 53% increase compared to a decade ago. Meanwhile, the median sales price for apartments rose 26.5% in 2018, to just over $1 million. Townhouses peaked in 2014 and 2015, just like Manhattan’s overall luxury market. Since 2017, townhouse prices have fallen 9%. The high-end of the townhouse spectrum also saw slower growth in sales than lower-priced properties.

Billionaire’s Row Resales See Big Losses Luxury new development resales have been some of the biggest loss-makers in recent years.  While only 7.7% of the 16,000 apartments resold in New York from 2014-2018 sold for an outright loss, that percentage jumped to 39% for luxury apartment resales in Midtown. Some of those sales were at notable high-end properties such as 15 Central Park West and 432 Park Avenue. One57, for example, saw 10 resales go for a loss. One factor to note, is that foreign buyers have been willing to take large losses as long as they’re allowed to move funds out of their home countries. 

Single-Family Construction Confidence Single-family new home construction jumped 25.1% from December. The jump in new home starts marked the biggest one-month gain in 40 years, attributed in part to a rise in demand from homebuyers now that mortgage rates have dropped.

If the January rate for residential home starts remained constant through the year, construction would begin on 1.23 million homes. That would be an increase from the government’s projections using December numbers. That showed only 1.04 million new homes would be built in 2019.

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